Water firms feel the cold

The Beast from the East exposed some water companies as woefully unprepared for extreme weather. Katey Pigden reports.

Water companies have some hard lessons to learn and must take steps now to avoid a repeat performance of the mistakes made before, during and in the aftermath of the so-called “Beast from the East”.

Ofwat has called out Thames Water, Severn Trent, Southern Water and South East Water in particular for their poor performance. The companies now have three months to submit a “detailed, externally audited, action plan” which sets out how they are addressing the issues identified. If they provide an “unsatisfactory response”, the regulator has warned it will take further action.

Ofwat’s Out in the Cold report, published on 19 June, shows more than 200,000 customers across the country did not have water supply for more than four hours and tens of thousands were left off supply for days.

“Households, businesses, schools and public organisations across the country were affected by either low pressure or no running water,” says John Russell, Ofwat’s senior director of strategy and planning.

The regulator suggests water companies need to take ownership and should view the incident as an opportunity to be seized to ensure trust and confidence in the sector.

“Some improvements will take time to complete, but steps must be taken now to ensure that customers are better protected next winter,” Ofwat urges.

It says: “Severe weather events are likely to become more common as the impacts of climate change are felt. Companies must continue to go further to ensure that the networks, processes and capabilities that they have will meet this challenge and ensure that customers are truly put at the heart of their businesses.”

The regulator’s review acknowledges frontline staff worked tirelessly and highlights some water companies were well prepared for the severe weather – which had been forecast – but it found others performed badly and caused “significant hardship” for customers.

Incident impact

Ofwat found too many incidences of poor advance planning, inadequate communication with customers and a lack of basic support.

It suggests the impact of the incident on customers depended largely on factors within the companies’ control, such as the quality of their plans for handling major incidents.

Those without appropriate plans in place for this type of incident had to design and deliver a response as it happened and were therefore slower and less effective than companies that already had robust plans in place and had better network data.

Better performing companies such as Northumbrian Water, United Utilities, Wessex Water and Yorkshire Water used real time information and monitoring systems to identify and manage the issues. Ofwat says they demonstrated resilience in their systems to increase production and move water to where it was needed.

Rachel Fletcher, chief executive of Ofwat, said: “The freeze and rapid thaw earlier this year was forecast and was not unprecedented. A number of water companies showed what can be done to serve customers in the face of bad weather.

“But too many companies were caught off guard and let people down, causing real hardship as a result.  Our report shows there is no excuse for this level of failure.”

Thames Water, Severn Trent, Southern Water and South East Water have all welcomed Ofwat’s findings and have apologised to affected customers.

Steve Robertson, Thames Water chief executive, said: “We rapidly increased water production by 15 per cent to minimise disruption, with less than a third of one per cent of our customers affected for more than 12 hours.

“The scale of leaks and bursts was the worst in living memory and the rapidity of the thaw had an unprecedented customer impact.

“We’re really sorry we could not protect those customers impacted and it is right that we have compensated them at a level considerably higher than the statutory rate.

“We are committed to working with Ofwat and all stakeholders to protect customers from future supply disruption and have already learned lessons following our own thorough analysis.”

Incident management overhaul

A spokesperson from Southern Water, added: “We are already implementing root-and-branch changes to how we will handle every aspect of such a major event.”

Companies said they are carrying out overhauls of incident management systems and investing to make the network more resilient with extra monitors to respond more quickly in the future.

Ofwat expects every water company to take action based on the review and the “industry as a whole to transform how it works together in situations like these”.

“Water is an essential service. Water companies must be prepared for whatever the weather brings,” Fletcher concluded.

Water UK chief executive Michael Roberts, said: “Ofwat’s report highlights what was done well – including the tireless work of frontline staff who kept water supplies going for most customers – and what was not done so well.

“The impact varied across the country, with Ofwat saying that fewer than 3 per cent of all customers were affected. But we’re sorry to say that in some areas significant numbers of customers experienced disruption and hardship, and we are determined to prevent this happening again in the future.”

The industry body said £150 billion has been invested to keep improving the industry since 1989 and customers and now five times less likely to suffer from supply interruptions.

“We want that record to get even better,” Roberts added.

However, the Consumer Council for Water (CCWater) said consumers felt “badly let down” after the Beast from the East.

It suggests a lack of emergency water supplier and poor communication from some water companies made life “needlessly more difficult” for thousands of homes and businesses when they were left without running water in March.

Communication was highlighted as a major concern as 43 per cent of affected households said they did not recall receiving any information from their company, the figure increased to 49 per cent for non-household customers.

“Clearly lacking”

The water watchdog said its research did not paint a positive picture of how water companies support and communicate with their customers during such incidents and support for vulnerable customers was clearly lacking.

At its vulnerability workshop in February, CCWater worked with companies on the scenario of a major supply interruption, which looked at planning alternative water supplies, communication and vulnerable customers.

It said it made the point then that relying on Priority Services Registers (PSR) alone will never be sufficient in such circumstances, as a larger number of people will suddenly find themselves in a vulnerable situation.

The challenge is for companies to be ready to help all customers in vulnerable circumstances and not just those on a PSR, CCWater suggested.

Tony Smith, chief executive of the Consumer Council for Water, said: “The most affected consumers felt badly let down by their water company, with little or no information and in many cases insufficient alternative supplies of water even for the most vulnerable households.

“As well as good compensation, consumers will want to see companies heavily penalised if they don’t act now to put these failures right.”

Water companies have paid out £7 million to customers in compensation but Ofwat’s review concluded that compensation arrangements – the Guaranteed Standards Scheme (GSS) – are not reflective of the impact on customers unable to access to water.

The regulator will work with the UK and Welsh governments to consider changes to the rules on compensation and will open a consultation by the end of next month.

Environment Minister Thérèse Coffey, said: “This detailed review by Ofwat has identified significant failings from a number of water companies. These are completely unacceptable, especially when the good performance of other water companies shows what can be achieved.

“Water companies now have a chance to address the issues raised as they develop action plans over the summer.  If they do not, we will support Ofwat in any enforcement action and will not hesitate to take regulatory action ourselves.”

With so many lessons to be learned, summer holidays are looking doubtful for water companies with two key submission deadlines now looming in September.

Ofwat says companies need to:

• Have better plans for emergencies
• Plan their bottled water distribution better
• Improve the information they have on their networks in order to spot problems early
• Have better plans and contact details for talking with their customers and other organisations that can help
• Step up for customers in vulnerable circumstances

So, what now?

• Ofwat expects each company to publicly respond to its findings by 28 September 2018
• Water UK will also coordinate work across the industry to share best practice and improve collaboration in key areas
• Ofwat will consult on compensation levels
• The regulator says it will be “watching closely” to make sure companies improve things for their customers and it will take further action if they don’t

CCWater research

The Consumer Council for Water (CCWater) asked more than 1,000 household and 260 non-household consumers supplied by seven of the worst affected companies – Affinity Water, Welsh Water, Severn Trent, South East Water, Southern Water, South West Water and Thames Water – about their experiences when they lost water supply in the wake of the severe cold weather.

The key findings include:

• Communication by companies to their consumers was poor. Two out of five affected consumers did not hear from their water company about the interruptions. There was an over-reliance on social media, and people found “word of mouth” by families and friends the best way to find out information.
• The provision of alternative, emergency water was inadequate. Seven out of ten consumers did not receive an alternative water supply during their interruption.
• Consumers in vulnerable circumstances had not been properly identified and catered for. The vast majority (93 per cent) of those identifying themselves as vulnerable felt they did not receive the support they needed.
• Businesses suffered all round from poor communication from their wholesale water company, inadequate emergency water and inadequate compensation that did not cover their losses.

The water watchdog said it will work with the industry to encourage improvements to the planning and preparations needed to ensure consumers are not left “high and dry” again during a major incident.